Courtesy of Mish.
Australia fundamentals deteriorate rapidly as evidenced by a collapse in the PMI Manufacturing Index in April.
Key Findings
- Manufacturing activity contracted significantly in April as conditions weakened amid a strong Australian dollar, intense import competition, high energy costs and weak local confidence.
- The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) fell 7.7 points to 36.7 on a seasonally adjusted basis. (Readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease.)
- This is the lowest level the Australian PMI® has recorded since May 2009, with many of the key sub-indexes also dropping to levels not seen since 2009. The three-month moving average in April fell to 42.2 points from 43.4 points in March.
- Contractions in activity were recorded in seven out of the eight manufacturing sub-sectors. Significant contractions were recorded in food, beverage & tobacco products; printing & recorded media; non-metallic mineral products; metal products; and machinery & equipment.
- Sharp declines in production, new orders and employment were recorded in April, while finished stocks and deliveries declined as well, albeit at a more moderate pace.
- Capacity utilization in the manufacturing sector fell 2.4 points to 68.6 (the lowest level since June 2009), consistent with the overall drop in activity in the sector.
- Exports continued to contract for the ninth consecutive month, as the exports sub-index fell to 24.5 in April. This was the lowest reading in the history of this sub-index (commencing in 2004).
- Significant contractions in manufacturing activity were recorded across most States, especially in Victoria where the record of activity fell 8.4 points to 29.1 in April, the lowest level on record.
New Orders
The new orders sub-index decreased by 7.0 points to 32.4 points in April (seasonally adjusted). This was the lowest level recorded for this sub-index since May 2009.
Employment
The seasonally adjusted employment sub-index decreased by 9.4 points to 39.3 in April, the lowest level since May 2009.
Inventories
Manufacturing inventories contracted again in April, with the sub-index falling 4.8 points to 46.4 (seasonally adjusted). The deliveries sub-index declined 7.3 points to 41.1, indicating that deliveries have been contracting since March 2012.
Australia PMI at a Glance
| Series Data | Apr Index | Mar Index | Percentage Point Change | Direction | Rate of Change | Trend (Months) |
|---|---|---|---|---|---|---|
| PMI™ | 44.4 | 36.7 | -7.7 | Contracting | Faster | 22 |
| Production | 41.7 | 33.1 | -8.6 | Contracting | Faster | 13 |
| Employment | 48.7 | 39.3 | -9.4 | Contracting | Faster | 18 |
| New Orders | 39.4 | 32.4 | -7.0 | Contracting | Faster | 8 |
| Inventories | 51.2 | 46.4 | -4.8 | Contracting | From Expanding | 1 |
| Supplier Deliveries | 48.4 | 41.1 | -7.3 | Contracting | Faster | 14 |
| Input Prices | 65.5 | 57.0 | -8.5 | Expanding | Slower | 131 |
| Exports | 27.4 | 24.5 | -2.9 | Contracting | Faster | 9 |
| Selling Prices | 43.0 | 40.3 | -2.7 | Contracting | Faster | 25 |
| Average Wages | 57.7 | 57.0 | -0.7 | Expanding | Slower | 48 |
| Capacity Utilization | 71.0 | 68.6 | -2.4 | Decrease |
Macro Alert From Steen Jakobsen
…
